Who's to Blame for Brain Drain?

"Brain drain" has emerged as a significant policy challenge for developing countries undergoing globalization. Also known as "human capital flight," brain drain describes the emigration of educated and highly skilled workers. The lure of wealth and opportunity elsewhere leaves labor-exporting economies in a self-reinforcing bind: How to develop when the best and brightest routinely set out in search of greener pastures?

"Every day, in countries all over the world, people leave their home countries in search of a better life for themselves and their families. Emigration has a profound effect on the countries migrants leave, those through which they transit, and those to which they move," said then UN Secretary-General Kofi Annan on the occasion of International Migrants Day in 2003. While undoubtedly profound, it is yet unclear whether brain drain's net effects are positive or negative.

Policy Innovations recently hosted a lecture on the topic by Federico Macaranas, executive director of the Policy Center at the Asian Institute of Management in Manila. His remarks, delivered at the Carnegie Council, highlighted the lack of consensus on how to address this problem.

"These attractive, developed countries poach talent from less developed countries like sharks in the water. Who owns the problem? The individuals, the sovereign nations, or international bodies?" he asked.

Macaranas addressed how the global competition for medical talent has distorted the local market for health professionals in the Philippines. As the population of the developed world ages, many countries face shortages of quality doctors and registered nurses. Western nations are turning to younger nations such as the Philippines to fill this gap. According to Macaranas, his country is now the number one supplier of nurses worldwide because of their demonstrated talent and English language skills. But although the quality of Filipino nurses is not in question, their numbers are.

"There is no hard data that can document the number of Filipino nurses abroad. Researchers are left to guesstimate how many there are," said Macaranas.

Rough estimates put the figure at 100,000, many of whom were trained as doctors. Filipino doctors have figured out that it is often more remunerative to emigrate and work as registered nurses than to remain at their hospital jobs in the Philippines.

Contrary to the tenets of classical economic analysis, as the number of medical professionals in the Philippines has decreased, so has the local wage rate. According to Macaranas, Filipino hospital administrators are keen to avoid over-investing in doctors and nurses that are likely to emigrate. As a result, wages are low and employees see the hospitals as stepping-stones to higher paying jobs overseas. More than 200 hospitals have closed in the Philippines in the last five years.

Not surprisingly, brain drain is viewed as having a negative impact on less developed, labor-exporting countries. But most countries do not collect detailed personal data on departing citizens. In the absence of hard numbers, it has proven difficult to elevate brain drain above the level of mere theory.

Remittances further complicate the effort to sort out the costs and benefits associated with brain drain. In 2005, according to the World Bank's Global Economic Prospects report, expatriate Filipinos sent home $11.6 billion. India received $21.7 billion. In some cases, remittances have been found to correlate with higher local savings rates and reductions in poverty. But there is also evidence to suggest that remittances retard local development by crowding out entrepreneurial initiative.

When it comes to the murky world of international migratory patterns, there are simply no reliable numbers for researchers to analyze.

A 2003 World Bank study by Richard H. Adams Jr. sought to overcome these empirical shortcomings by creating a data set based on U.S. and OECD estimates of migration and education levels. The vast majority of legal immigrants, according to Adams, are educated at the secondary level or higher. The impact of this migration is not as pernicious as one might think. In fact, only 10 percent of the university-educated population of labor-exporting countries was lost to migration.

"International migrants… tend to be much better educated than the rest of the population of their country of origin. However, in terms of actual brain drain on their country of origin, international migration does not seem to take a very high proportion of the best educated," writes Adams.

Adams points to a different, non-traditional view, which sees brain drain as a net positive for less developed countries.

"[S]ince the world at large values education, allowing migration of the best and brightest from a developing country may actually increase the incentive to acquire education. Since only a small faction of educated people in a specific country would migrate, this would encourage the average level of education of the remaining population to rise," he writes.

"Take the Indian Institute of Technology, suppose 50 percent of the top students choose to migrate, the bottom 50 percent of that class is still pretty good and they are better for having competed with the more talented group," said Hunter College economics professor Partha Deb, who left India after graduating from Calcutta University in 1986. He recounted his decision to emigrate in a recent interview with Policy Innovations.

"I knew that it would be hard to find interesting work for decent pay in India. There was very little opportunity to do the kinds of things I wanted to do [in India] at that time, so I left. It was that simple," he said.

Macaranas would like to see the creation of an independent, international organization to regulate the flow of people across borders. He notes that Western importers of Filipino doctors and nurses are on the receiving end of a tremendous discount.

"Training costs are very low in less developed countries. It would take $3 billion to train and replace the hospital workers that have left the Philippines. Filipino nurses need to be trained, but not at the expense of health care in the Philippines. We need an inter-country agency in the interest of global health," he said.

If Thomas Friedman is correct and globalization is causing the world to flatten, then it is only a matter of time before the West feels the pinch of brain drain as well. In fact, according to a report in The Independent, emigration from Germany is now at levels not seen since the years immediately following World War II. Nearby Switzerland has become the number one destination for educated Germans fleeing high unemployment, followed by the United States and Austria. Emigration of German women ages 18–29 has increased 25 percent in recent years.

Sovereign nations seem unlikely to cede regulation of immigration policy to the type of outside body that Macaranas envisions, such as a World Migration Organization. After all, the arrangement currently works in Western nations' favor. But perhaps institutionalizing the issue would help to quantify the debate and provide a more accurate appraisal of brain drain's effects. As developed countries see more of their educated young people leaving for jobs in other, wealthier nations, perhaps demand for such a body will increase.

Meanwhile, rational actors will continue to do what they usually do in a market economy: follow the money.

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